Boulder to ask voters, again, to extend lease terms for city properties

Local institutions say longer leases necessary to procure investments

Jim Polstra, senior engineer at Avidyne, pumps gas into an experimental airplane on Aug. 17, 2012, at the Boulder Municipal Airport. Avidyne is working to build a safer autopilot system and is using the airplane as a test plane. The airport is one of the city properties negatively impacted by the short leases offered to tenants by the city of Boulder. Photo by Jeremy Papasso.
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JEREMY PAPASSO
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Four years ago, David Rubin had a $5 million loan lined up for a complete redo of A Spice of Life Event Center at the Flatirons Golf Course. Rubin, president of the catering and events company, wanted to make it the greenest building in Boulder and a facility that the golf course's clientele "deserves."

Those plans went on the shelf when Boulder voters narrowly rejected a charter amendment that would have allowed the city to offer leases of up to 40 years. The charter currently limits the city to leases of no more than 20 years. However, many investors and banks balk at putting money into facilities that don't have longer leases.

The Boulder City Council plans to present a similar charter amendment -- this time for 30 years instead of 40 -- to voters this fall. The City Council will vote on the final ballot and ordinance language on Tuesday.

Approving leases longer than 20 years would require a two-thirds majority of the City Council, according to the proposed ballot language. Longer leases also would have to show they offered a "public benefit," like generating revenue for the city, creating jobs or providing important services not offered by the city.

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City leaders have asked the voters twice before to allow longer leases on city property. In 2007, nearly 61 percent of voters said no to a charter amendment that would have allowed 40-year leases. In 2008, the vote was much closer, with 51 percent rejecting the proposal.

The restrictions on lease lengths affects a number of community institutions, including the Boulder Municipal Airport, the Colorado Chautauqua Association, the Dairy Center for the Arts, A Spice of Life Event Center and the Boulder Museum of Contemporary Art.

At the airport, tenants lease land from the city and build structures that become property of the city at the end of the lease.

Because of the shorter lease terms, several potential tenants have decided not to locate at the Boulder airport, said city spokeswoman Jody Jacobson.

"We've had about a dozen potential tenants out there who looked into building new structures but decided they couldn't recoup their costs," she said. "Some of those could have added jobs to Boulder County, and instead, they moved on to other airports."

The Dairy Center has the capacity to have a 100-kilowatt solar power system on its roof, but solar systems typically pay for themselves in 25 years.

"It's hard to justify putting in that kind of money with a 20-year limit," said Joe Castro, the city's facilities manager.

The Dairy ended up installing a 34-kilowatt system instead, paid for with a federal grant.

Richard Polk, chairman of the Dairy's board, said it's also an issue when trying to solicit large donations.

"People want it to mean something that they were alive, but they want to give money to places that are going to be around for a long time," Polk said. "To give real money, people need to have confidence that you're going to be around."

Polk said that ideally, for cultural institutions like the Dairy, the city would offer 50-year leases. However, a 30-year lease would at least make lenders more comfortable.

Boulder Parks and Recreation Director Kirk Kincannon said public-private partnerships allow the city to leverage private financing to offer services the city cannot afford on its own.

Investors in a tennis facility were interested in locating at Valmont City Park, but they passed because of the shorter lease terms.

A Spice of Life's Rubin said some cities offer 99-year leases. The lease terms are structured so that bad operators who don't generate revenue or maintain facilities would lose their lease.

He would prefer something above 40 years but said 30 years would be a good start.

Rubin said the complete renovation he imagined doesn't make sense with a 20-year term.

"By the time it's paid off, you lose the land lease," he said. "Why would any entrepreneur invest in a business like that?"

He's continued to put money into the event center -- hundreds of thousands of dollars, he said -- but the building's 40-year-old plumbing and electric systems needs constant attention.

"It looks great right now but it could be amazing if we completely redid it," Rubin said. "It works, but they do not have and cannot offer their clientele the facilities they deserve."

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